HSBC Deutschland Sales Meeting Düsseldorf...Automatic Route: Foreign Investment is allowed under...
Transcript of HSBC Deutschland Sales Meeting Düsseldorf...Automatic Route: Foreign Investment is allowed under...
HSBC Deutschland
Commercial Banking
Global Liquidity and Cash Management
Sales Meeting Düsseldorf
Presentation by: Thomas Sasse
Attorney | Partner
HSBC Deutschland
Königsallee 21/23, 40212 Düsseldorf
Location: HSBC Deutschland, Düsseldorf
Date: 02.04.2019
Time: 13:30 CET
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INVESTING IN INDIA
Aspects to consider:
The routes under which foreign investment can be made is as under:
a. Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Regulation 16 of FEMA 20 (R).
b. Government Route: Foreign investment in activities not covered under the automatic route requires prior approval of the Government
Capital instruments permitted for receiving foreign investment in an Indian company
Equity shares, debentures, preference shares, share warrants, GDRs, ADRs and FCCB issued
by the Indian company.
Foreign Investment vs Foreign Direct Investment vs Foreign Portfolio Investment
Foreign Investment means any investment made by a person resident outside India on a
repatriable basis in capital instruments of an Indian company or to the capital of an LLP.
Foreign Direct Investment (FDI) is the investment through capital instruments by a person
resident outside India (a) in an unlisted Indian company; or (b) in 10 percent or more of the
post issue paid-up equity capital on a fully diluted basis of a listed Indian company.
Foreign Portfolio Investment is any investment made by a person resident outside India in
capital instruments where such investment is (a) less than 10 percent of the post issue paid-
up equity capital on a fully diluted basis of a listed Indian company or (b) less than 10 percent
of the paid-up value of each series of capital instruments of a listed Indian company.
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Forms in which business can be conducted by a foreign company in India
Foreign companies can make investments or operate their business in a number of ways as
given below:
o Liaison/Representative Office
o Project Office
o Branch Office
o 100% Wholly-owned Subsidiary
o Joint Venture Company
Foreign Companies in India
Joint Venture
Comnpany
Liaison/ Represen-
tative Office
Project Office
Branch Office
100% Wholly-owned
Subsidiary
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How does a foreign company invest in India?
Either through:-
a. Automatic Approval - by the country's Central Bank, the Reserve Bank of India (RBI), Mumbai, or
b. Through the Foreign Investment Promotion Board (FIPB) (i) Subject to sector specific guidelines, automatic approval through RBI is
available for all items/activities except a few. (ii) FIPB approval is required for all other proposals not eligible for Automatic
Approval.
Capital account convertibility allowed in India?
At present, the Indian currency is convertible only on current account, though some capital
account transactions are also permitted.
Automatic Approval
by the Central Bank, i.e.,
the Reserve Bank of India
Foreign Investment Promotion
Board
this appproval is required for all proposals
not eligible for automatic approval
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Legal and Regulatory Framework
There are several laws are formulated by the Centre, there are State specific laws and rules
that should be taken note of, and these would vary depending on the State where the investor
commences operations. Accordingly, there are various regulators and authorities that the
investor should engage with in compliance with the applicable laws and regulations. The
investor should ensure that appropriate registrations are obtained and all records are
maintained according to the requirements under applicable Indian laws.
Settlement of disputes in India
India follows the common law and has a single court system to administer both Central and
State laws. The court system is broadly three tiered, comprising the lower District Courts, the
High Courts and the apex court – the Supreme Court of India. Court litigation in India is
generally subject to delays, and owing to a backlog of cases before Indian courts, commercial
disputes are being subject to alternative modes of dispute resolution, such as arbitration.
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1. Which industries in India are particularly subsidized / supported by the
government?
The industries which are particularly subsidized / supported by the Indian Government
are the Food, Fertiliser and Petroleum industry, which constitute 88.3 per cent of the total
budgeted estimates for 2017/18. Of this, food subsidy accounts for the largest chunk of
the total subsidy (53%).
Key strategic industries earmarked for development through targeted policies and
supportive initiatives are: Infrastructure, Renewable Energy, Food Processing,
Telecommunications, Manufacturing including electronic system design, Service
Sector including IT and Leisure & Tourism.
(Source: https://www.standupmitra.in/Home/SubsidySchemesForAll &
https://www.smeventure.com/10-best-government-subsidies-small/)
2. What are India’s economic priorities?
India’s economic priorities are currently:
i. Employment of future workforce: About 10 million working age people every
year join the Indian labour market + the participation rate of women in the
labour force is one of the lowest in the world (about 25%).
ii. Economic inclusion of rural India: Very soon, 40% of Indians will be urban
residents. The Government aims to include rural India in its economic plans
as there is a large economic divide between urban and rural India. The
Government has launched programs such as Digital India, which aims to
include the rural sections of India.
iii. Macroeconomic Stability: a prerequisite to sustainable growth and job
Creation
o Fiscal consolidation to creating space for more investment
o De-risking the external sector
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iv. Sustainability: India has some of the world’s most polluted cities. The reason
being that there is a high-density population along with non-sustainable
environmental policies of companies. The Government aims to address
these problems.
v. Fixing the stressed sectors, namely:
o Agriculture & the rural economy
o Infrastructure
o Power
o Financial Sector
vi. Making growth inclusive and sustainable
o Education
o Dealing with the skills shortage
o Women’s labour force participation
o Healthcare
o Environment
o Social Protection
(Source: https://www.bloombergquint.com/global-economics/an-economic-
strategy-for-india-by-rajan-gopinath-and-others-full-report#gs.2xzx63 )
3. Which regulatory and cultural challenges are the biggest hurdles for a market
entry of a European company?
Regulatory Challenges:
The biggest regulatory challenge in India is its red-tape bureaucracy and non-tariff
barriers to get permits or registrations. Fortunately, this is changing quickly as India has
moved up the Ease-of-Doing-Business Index from #142 in 2014 to #77 in 2018.
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Regulatory Challenges in detail:
o Trade Barriers: Any restriction imposed on the free flow of trade is a trade
barrier. Trade barriers are tariff barriers (the levy of ordinary negotiated customs
duties in accordance with Article II of the GATT) and non-tariff barriers.
o A delicate economy and uncertainties around the progress of reforms
o Local Sourcing: Foreign direct investment reforms in many sectors like single
brand retailing; have been relaxed continuously by the Government of India in
past years. Investments under this policy have to comply with 30% local
sourcing norm. This is a welcome move. For European companies this still
remains a challenge with 5- years cap. Most European companies have high
demands on standards when it comes to procuring raw material, setting supply
chain, compliance in manufacturing etc. This with long term perceptive to do
business with India, may make local sourcing possible but in more than 8-10
years.
o Labelling: When it comes to adapting global product label to Indian standards
many European companies find this as a challenge. Most companies can work
systems globally to take care of 6 mandatories on the product label prescribed
in India for packaged commodities. What remains a challenge is Maximum
retail price as mandatory component on each product label. The Indian labelling
component of Maximum Retail Price (MRP) is seen by European companies
especially retailers as a big challenge to operate in the Indian market. This
leads to higher operational costs putting Indian customers at a disadvantage of
a higher price compared to customers in other markets with simpler labelling
rules. Government of India in Dec 2017, came with relaxation for single brand
retailers on declaration of retail trade price. But unfortunately, this relaxation is
only for a year and that too needs to be applied which is again a cumbersome
process.
o Testing Requirements: International standards are not recognized in India
when it comes to product and compliance requirements during imports coming
from Europe. In India there are different departments dealing with certification
of different aspects of the same product, often without alignment or
coordination.
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Indian authorities don’t recognize international standards and certification
schemes. Most of the products undergo testing requirements again at customs
in India. Samples are taken at port and sent to test labs. The shipment is held
at port until results are received, disrupting supply chain and adding to long
lead time.
o Service barriers: Services in which there are restrictions include: insurance,
banking, securities, motion pictures, accounting, construction, architecture and
engineering, retailing, legal services, express delivery services and
telecommunication. The Indian government has a strong ownership presence
in major services industries such as banking and insurance. Foreign investment
in businesses in certain major services sectors, including financial services and
retail, is subject to limitations on foreign equity. Foreign participation in
professional services is significantly restricted.
Cultural Challenges:
With regards to cultural challenges, it is important to bear in mind that India is a country
with many facets: India is a multilingual, multi-ethnic and pluralistic society, and vast
cultural differences can be seen between different states of India.
The great Cambridge economist Joan Robinson once observed: “Whatever you can
rightly say about India, the opposite is also true.” Indians place great value on
relationships: it is rewarding to take the time to develop contacts and relationships.
English being one of the official languages is generally the business language in India.
o Business Structure: Indian businesses tend to be quite hierarchical.
Instructions are delegated down the chain of command, with few opportunities
to relay ideas or criticisms up the chain by lower-ranking employees. In Europe
and particularly in start-ups who value creative freedom - it’s much more
common to find a flat company structure.
o Directness: Another difference in the broader culture is that the European
business culture is famous for its direct and blunt communication. They like to
be quite straight-forward in their communication even if it sounds rude. Indians,
on the other hand, prefer long and indirect talks to sound polite and not to
offend.
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o Negotiating: In India it’s a common part of business practice to negotiate deals
at length, haggling down everything from supplies, to partnerships to business
services. But due to the direct and straightforward nature of European business,
haggling can be considered rude and off-putting in these countries. Building
lasting relationships is crucial to starting out in Europe, and increasing the
chances of long-term success. While there is room for negotiation, bargaining
too much can jeopardise these nascent bonds with other businesses. It’s
acceptable to ask for a discount or “best price” but going in too hard won’t make
the best of first impressions.
o Pragmatism: In India, when a business deal has been negotiated, it’s common
to consider and scrutinise it for a long period of time. While Europeans are not
as anxious about these waits as Americans, who like to get to the point very
quickly, delays can still cause consternation. Nobody minds a short delay for
reasons of research and comparison, but holding off unnecessarily can be seen
as a criticism of the business’ trustworthiness. By taking too long and
scrutinising too much, any deals are at risk of being jeopardised.
o Punctuality: The Europeans highly appreciate punctuality and like to adhere
to the strict deadlines. If they are unable to complete the task on the assigned
deadlines, then they are expected to inform beforehand as they do not like
surprises. This is in contrast to India where punctuality is more of a luxury. But
today in the business world “on time” is normal.
(Source: www.eurostartentreprises.com/business-advice/item/113-
7-key-differences-between-european-and-indian-business-
culture#.XJtuoZgzZPY)
4. What special features depending on the region must be considered in India with
regard to different legal frameworks?
Before 1st July 2017, there were different legal frameworks when it came to Indirect Tax.
But after the said date, the Government had passed the Goods and Services Tax (GST)
Law, which created uniformity between all Indian states when it came to tax.
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5. In your opinion, as per the ease of doing business and considering all regulatory
conditions, which region would you recommend for which type of business?
India’s annual ranking of business friendliness of countries has improved in “Ease of
Doing Business” over the last two years. The recommended regions for doing business
as per different sectors are as below:
Region State Industries
North Delhi Food Processing, Construction
North Haryana,
Uttar Pradesh
Automotive, Agro-based industry, IT &
ITeS, Textiles, Oil Refining,
Biotechnology and Petrochemicals,
Pharmaceuticals, Power, Tourism
West Maharashtra,
Gujarat
Finance, Engineering, Auto and auto
Components, Food Processing,
Electronic System Design and
Manufacturing, Pharmaceuticals,
Biotechnology, IT & ITeS, Oil & Gas,
Chemicals, Construction &
Infrastructure, Gems & Jewellery
Central Madhya Pradesh, Chhattisgarh
Agriculture & Forestry, Power, Minerals
East Jharkhand, Odisha,
West Bengal
Mining and Mineral Extraction,
Engineering, Iron and Steel, Chemicals,
Handloom and Cement, IT, Leather,
Textiles, Agriculture/Horticulture, Tea
South Andhra Pradesh,
Karnataka, Telangana,
Tamil Nadu, Kerala
IT and ITeS, Aerospace, Manufacturing,
Automotive Components, Biotechnology
& Pharmaceuticals
(Source: Moneycontrol.com)
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6. Where is the demand of the know-how of an international bank particularly strong
and can both sides make effective use for business strategies and development?
According to the Reserve Bank of India, there are 45 foreign banks in the Indian banking
sector, with 286 branches amongst them that are spread across all major metro cities in
the country. International banks are expected to widen their network through institutional
banking. India being one of the fastest growing nations in the world, economic growth and
positive reforms mirror their sentiment of stability and soundness of the central bank
continues to remain attractive to foreign investors.
Historically, India’s qualified workforce supplied services in the outsourcing sector to the
world, as well as know-how. We expect that the mere cost arbitration focus in the
outsourcing business will be replaced by knowledge sharing, and thereby step up on the
value chain ladder.
The demand for NRI or Expatriate, migrant and international student banking as well as
international business banking due to outbound investments by Indians in to foreign
countries is showing a steady positive growth. Foreign banks come forward to provide
assistance by equipping them with the necessary instruments and unique benefits
through their international presence. This is mutually-benefitting for both sides.
7. What aspects would you consider regarding an investment in India in terms of
production, sales and finance?
Production
India is Asia’s third largest economy and India seeks to raise manufacturing from 17% to
25 % of GDP, thereby creating 100 million jobs within a decade. India hopes to become
a global manufacturing hub with the ‘Make in India’ campaign.
India has a massive workforce, an emerging supply base, and access to natural
resources needed in production—notably, iron ore and aluminum for engineered goods,
cotton for textiles, and coal for power generation. The country could become a viable
manufacturing alternative to China in industries ranging from apparel to auto components
and might even dominate some skill-intensive manufacturing sectors.
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India’s manufacturers have a great opportunity to emerge from the shadow of the
country’s services sector and seize more of the global market. A McKinsey analysis finds
that rising demand in India, together with the multinationals’ desire to diversify their
production to include low-cost plants in countries other than China, could together help
India’s manufacturing sector to grow six-fold by 2025, to $1 trillion, while creating up to
90 million domestic jobs.
India’s manufacturing sector realized its full potential, it could generate 25 to 30 percent
of GDP by 2025, thus propelling the country into the manufacturing big leagues, along
with China, Germany, Japan, and the United States. Along the way, we estimate that
India could create 60 to 90 million new manufacturing jobs and become an attractive
investment destination for its own entrepreneurs and multinational companies.
Sales
By E-Commerce sales - India stands at 18 Billion USD in 2017, and is expected to grow
to 51.2 Billion USD in 2023.
The reason is the large consumer market potential in India with a rising middle class that
is similar in size like Europe.
Finance
India’s banking and insurance sectors have been experiencing large volumes of growth.
With the rules of foreign investment being relaxed, this has received an affirmative
feedback from the Insurance industry. This is bound to produce a large volume of JV
between various foreign and local insurance companies. Further, India’s mobile wallet
transactions is pegged to touch INR 32 Trillion (492.6 Billion USD) by 2022.
(Source: https://www.mckinsey.com/business-functions/operations/our-
insights/fulfilling-the-promise-of-indias-manufacturing-sector)
8. How did the cash reforms at the end of 2016 affect the economy and the
development of digital payment infrastructure?
Initially, there was a lot of disruption to the economy as the 500 and 1000-rupee notes
were India’s two biggest denominations (accounted for about 86% of India’s cash in
circulation).
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Impact of Demonetisation in detail:
Gross Domestic Product (GDP)
As about 78% of all Indian customer transactions are in cash, this led to a shock in the
fiscal system. It is reported that at least 1% was wiped out from the country’s GDP, which
affected about 1.5 Million jobs. The GDP growth rate of 8.01% in 2015-2016 fell to 7.11%
in 2016-2017 after demonetisation. This was largely due to less availability of cash in
cash-intensive industries like manufacturing and construction. It has also adversely
impacted the primary function of banks to issue loans and has put pressure on them as
current account holders demand large sums of cash.
Small Scale Industries
Businesses like the textile industry, salons, restaurants, and seasonal businesses are low
capital enterprises and work on the basis of liquidity preference. Demonetisation gravely
impacted their revenue collection and threatened their existence to an extent.
Development of Digital Infrastructure
Post-demonetisation, the government and the Reserve Bank of India have promoted the
use of digital payments. There are mainly five modes of transactions that are increasingly
being promoted. These are Unified Payment Interface (UPI), Unstructured
Supplementary Service Data (USSD), Aadhaar Enabled Payment System (AEPS),
mobile wallets and debit/credit cards. National Electronic Fund Transfer (NEFT)
transactions had gone up from INR 9.88 Trillion in September 2016 (two months before
demonetization) to INR 141.82 Trillion in September 2017, and to INR 180.15 Trillion in
September 2018. According to Payswiff, a payments transaction platform, there has been
a 440 % in all digital transactions increase since demonetization.
Absence of liquid cash has led to people making transactions using cheques or account
transfers. Consumers have switched to virtual wallets like Paytm which allows electronic
transfer of money. All this will result in a digital economy where transactions are being
recorded and the economy has more white money and this might increase the
government’s tax revenue.
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The long-term effects of Demonetization are yet to be ascertained. It is expected that it
can improve the Indian economy in the long run by increasing tax compliance, financial
inclusion, consequently improving the state of the economy. It can boost the GDP by
increasing the availability of funds for lending and also by reducing transaction costs if
the economy moves to digital modes of payments.
(Source: https://www.youthkiawaaz.com/2017/12/impact-of-
demonetisation-on-the-indian-economy/)
9. What is the outlook for the current year in connection with the economic dispute
between the USA and China? Is the country profiting from this?
With the ongoing economic dispute between USA and China, India aims to focus on
boosting its export to USA and other global markets. It is reported that the Indian
Government is focusing on exporting chemicals, electrical/automotive parts, etc. This
trade war presents opportunities for India’s manufacturing sector and is a big boost for
the Make in India program. This is, naturally, bound to benefit India in the short term but
in the medium to long term, a harmonized agenda between India and USA or other target
countries will consolidate any opportunity.
The trade war that U.S. President has started will profoundly reshape the global
economy. The trade war will create new impetus for the EU and Asia to speed up the
opening of their markets to forge closer economic ties. This will lead to even faster growth
than in the last decade in trade between the EU and Asia, accompanied by rising
investment. The network of global supply chains that has revolutionized the nature of
trade and investment since the 1980s will expand and become more productive and more
densely intertwined across Europe and Asia while withering in the U.S.
As the global trade roughly accounts for about 25% of global gross domestic product. In
an era of interconnected markets and global supply chains, the current trade tensions
between the U.S. and China are likely to have significant contagion effects around the
world. This would have an enormous impact not just on US-China bilateral trade but also
on many other countries due to global supply chain linkages.
(Source: https://www.forbes.com/sites/yuwahedrickwong/2018/07/13/how-
the-u-s-china-trade-war-will-transform-the-global-economy/ )
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10. How is it that there is a huge difference in salary structures between China and
India? Is China really that much further advanced than India?
Salary levels were determined as a composite of 14 different professions after taking
deductions for taxes and social security into account. China earn an average of about 18
percent of their New York based counterparts, while in India the ratio is just above 8
percent. But it varies from sector to sector.
China’s hourly rates indicate that levels for professionals are about double that of India in
the primary cities. A reason for this is the aging demographics of the Chinese population
compared to India, which is experiencing a population boom and has, as a result, released
a greater number of younger workers into its workforce.
Workforce in India are apparently the hardest working in terms of working hours, likely a
result of weak legislation on working hours. Meanwhile, China is quickly approaching the
levels in the United States (U.S.) due to strictly enforced labor law regulations and the
legal requirement to compensate for overtime work.
The difference in salary structure between China and India, could be explained by the
growth story of China. China has economically grown faster than India for longer periods
of time. This high growth has also resulted in wage increases for employees, which has
thereby resulted in higher costs for manufacturing/service Chinese companies. Thereby,
Firms are now looking elsewhere to produce their products, where the wages are much
less, such as in India. India’s low labour costs, along with its well-equipped work force,
provides high incentivize for foreign investment in the country. This gives India an edge
over China, where the latter’s aging population and shrinking workforce means the wages
will remain higher.
(Source: http://www.asiabriefing.com/news/china-india-wage-comparison/)
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11. If a customer is in the consumer/retail market and wants to serve the entire Indian
market, which location is recommended?
Investors should note that there are large differences between the regions that should
be taken into account when designing an entry strategy.
o Northern Region: Key cities and sectors: - Delhi-NCR; The Delhi-Jaipur-Agra -
golden triangle: Commerce and manufacturing hub; - Kanpur: Investment Corridor
for leather and textile machinery.
o Eastern and Central Region: Key cities & sectors: - Kolkata: Heavy engineering
and IT - Jamshedpur: Automotive - Chhattisgarh: Power, steel and iron ore, Low-
cost human resources, Rich natural resources, Comparatively low land price.
o West Region: Key cities and sectors: - Mumbai-Pune corridor and Nasik:
Engineering; - Surat: Textiles and gemstones; - Ahmedabad-Baroda-Ankleshwar:
Refineries, petrochemicals, pharmaceuticals, chemicals and fertilizers. High
Government incentives, Emerging software and other high-tech industries, Mix of
cities with diverse economic and social hierarchies.
Consumer Retail
Commerce and Manufacturing,
Leather & Textile Machinery
Heavy Engineering & IT,
Automotive, Power, Minerals
Automotive, Engineering, IT, Pharmaceuticals,
Petroleum, Chemicals
Engineering, Textiles, Gems,
Refineries, Petrochemicals,
Fertilizers
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While Maharashtra with its capital Mumbai is still the biggest economic centre in
India, other states are coming up fast, providing growth potential.
o Southern Region: Key cities and sectors: - Chennai-Sriperumbudur: automotive
and heavy engineering - Coimbatore: engineering and textiles - Salem: steel, food
processing, poultry - Bangalore-Hosur: IT - Hyderabad: Agriculture,
Pharmaceuticals and IT - Vishakhapatnam-Kakinada: petroleum, chemical and
petrochemical, developed IT outsourcing industry.
(Source: KPMG report on Investing in India)
12. “Trapped Cash”: The notion that whoever invests in India does not get anything
back for the time being (+ 5 years), but strategically an investment makes sense
anyway. What do you think about this and what are the 3 biggest Pros and Cons
for and against India?
Trapped cash, unfortunately, is still a bottle-neck in emerging markets. Fortunately, there
are reforms taking place to ease the cross-border flow of funds and assisting companies
to have a strong liquidity in their business environment.
Companies in India are able to lend money to their overseas subsidiaries as long as it
doesn’t exceed 400 % of their net worth.
India provides huge opportunities for German companies. India is one of the biggest
market with a functioning democracy. Most German companies operating in India make
maximum profits than their counterparts in other parts of the world.
The new focus area of Indian Economy provides splendid opportunities:
Make in India: Make in India has come with lots of benefits and advantages or the Indian
Economy. Due to this fact companies from across the globe making a huge investment
in Make in India project, and have thrived successfully, making India a hub for the
manufacturing companies.
Digital India: India comprises of 15 per cent of the world population, and with a growth
rate of 7 to 8 per cent, India can very well become the second largest economy by 2030.
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To achieve this, the government considers the digital economy as the primary growth
enabler. The major ICT initiatives of the Government included, inter alia, some major
projects such as railway computerization, land record computerization, which focused
mainly on the development of information systems.
Skilling, Entrepreneurship and Job Creation
Skill India: India aims to have one of the strongest economic growth stories in the 21st
century, it becomes vital to ensure its growing workforce is capable to handle the incoming
disruptions and find suitable jobs. Skill India’ aims at providing skill development to over
400 million youth of India by 2022, covering every Indian village for which various training
programmes and schemes have already been proposed. These skill development
programme opens up avenues by which the youth accepts responsibility and no one
remains idle because an idle youth is a burden to the economy. The economy is
concentrating on job creation and social security schemes. With this new approach
towards skill development, India is definitely moving forward towards its targeted results.
Start Up India: Startup India is a revolutionary scheme that has been started to help the
people who wish to start their own business. These people have ideas and capability, so
the government has given them support to make sure they can implement their ideas and
grow. Success of this scheme will eventually make India, a better economy and a strong
nation. The 19-point Action Plan envisages several incubation centres, easier patent
filing, tax exemptions, ease of setting-up of business. This action plan focuses both on
restricting hindrances and promoting faster growth.
The 3 biggest pros for India are:
o According to Oxford Economics, India will remain the fastest growing major
economy till the next decade (2019-2028).
o By 2026, 64% of Indians are expected to be in the working age group of 15-59
years, which basically computes to being the largest-cum-diverse workforce in the
world.
o The Ease-of-Doing-Business Index in India was up at #77 in 2018 from #142 in
2014.
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The 3 biggest cons for India are:
o Red-tape bureaucracy and trade barriers to get permits or registrations.
o Protectionist sentiment by certain industry associations/lobbies.
o Slow, yet sustainable, decision making process by the Government.
(Source: http://www.makeinindia.com/home, https://Startupindia.Gov.In, Pradhan Mantri
Kaushal Vikas Yojana (PMKVY) and http://in.one.un.org/un-priority-areas-in-india/)
13. Are deliveries and logistics across the country now easier? What do you think
about that?
Absolutely. Logistics sector has become much easier, especially after the implementation
of Goods and Services (GST) Tax. This helped in the movement of trucks between inter-
states as check posts were dismantled. Due to GST, there was a 20% reduction in
turnaround time of trucks. Further, the activation of the e-way bill on consignments more
than INR 50,000 in time would free truckers of unnecessary checking by the respective
state government.
Logistics form the backbone of the Indian economy and according to an economic survey
in 2017-18, the Indian Logistics market is pegged to touch around USD 200 Billion by
2020, growing at a compound annual growth rate (CAGR) of almost 10.5%.
Logistics companies are facing an era of unprecedented change as digitisation takes
hold and customer expectations evolve. New technologies are enabling greater efficiency
and more collaborative operating models.
Start-ups drive new business models: New entrants become significant players and take
market share from the incumbents through new business models based on data analytics,
blockchain, or other technologies. One or two become dominant in specific segments.
Last-mile delivery becomes more fragmented, with crowd-delivery solutions gaining
ground. These start-ups collaborate with incumbents and complement their service offers.
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Redefining Collaboration: Horizontal collaboration is already happening, especially in
last-mile delivery, but it’s hampered by inconsistencies. Higher levels of efficiency could
be achieved by more consistent standards, defined through the Physical Internet and
increased collaboration, whether in the form of alliances, joint ventures or M&A.
(Source: https://www.pwc.com/gx/en/transportation-logistics/pdf/the-future-of-the-
logistics-industry.pdf )
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